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WBK Industry News - Federal Regulatory Developments

First National Bank of Omaha Settles with CFPB over Alleged Deceptive Practices in Credit Card Add-On Products

On August 20, 2016, the CFPB issued a consent order with First National Bank of Omaha, settling allegations of deceptive practices in the Bank’s marketing and administration of credit card add-on products, including credit monitoring and debt cancellation products.  According to the order, these practices violated the Consumer Financial Protection Act’s prohibition on “unfair, deceptive, or abusive” acts or practices.

Much of the order focuses on the wording used by the Bank’s telemarketers to induce customers to sign up for its add-on products.  Among other things, telemarketers sometimes implied that the products were free when they were not, and stated the products could be cancelled “immediately” with “no questions asked” when in reality, customers were often forced to demand cancellation multiple times.  For those customers who attempted to make use of their debt cancellation protection, the Bank created a number of unreasonable hurdles such that only 9% of customers who initiated claims succeeded in getting benefits.  For some customers, the Bank never actually provided the credit monitoring services that the customers had purchased.

The order states that there were a total of 257,000 customers affected by these practices.  The Bank was ordered to provide redress to those customers in a total amount of $27.75 million, and to undertake a number of remedial measures.  An additional $4.5 million civil money penalty was also levied by the CFPB.

The consent order can be accessed here:  http://files.consumerfinance.gov/f/documents/082016_cfpb_FNBOconsentorder.pdf.